WF vs. HDB: Which Stock Is the Better Value Option?

Investors looking for stocks in the Banks - Foreign sector might want to consider either Woori Bank (WF) or HDFC Bank (HDB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Woori Bank is sporting a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #3 (Hold). This means that WF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

WF currently has a forward P/E ratio of 7.59, while HDB has a forward P/E of 13.61. We also note that WF has a PEG ratio of 0.66. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HDB currently has a PEG ratio of 1.09.

Another notable valuation metric for WF is its P/B ratio of 0.62. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, HDB has a P/B of 1.71.

Based on these metrics and many more, WF holds a Value grade of B, while HDB has a Value grade of D.

WF has seen stronger estimate revision activity and sports more attractive valuation metrics than HDB, so it seems like value investors will conclude that WF is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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